1. © Hogan & Hartson LLP. All rights reserved. Columbia University Discussion of effort reporting principles Michael J. Vernick January 8, 2008

2. © Hogan & Hartson LLP. All rights reserved. Why is there so much emphasis on effort reporting? Federal funding comes with certain strings attached – Compliance with applicable cost principles – Because of the legal requirements, all universities and academic medical centers should have effort reporting systems, policies and procedures – Columbia’s recent work is consistent with what many of its peer institutions are doing

3. © Hogan & Hartson LLP. All rights reserved. Why is there so much emphasis on effort reporting? (cont’d) Frequent focus of Federal enforcement activity Several multi-million dollar False Claims Act settlements OIG audits – NSF is currently conducting a series of effort reporting audits

4. © Hogan & Hartson LLP. All rights reserved. What is effort reporting? The salaries paid by Columbia to its employees working on Federal grants are generally charged or allocated to those grants on the basis of effort expended For example, if 25% of an employee’s total Columbia effort is expended on a Federal grant, then up to 25% of the employee’s salary is chargeable to that grant The 25% effort figure is derived by estimating effort devoted to the grant, and expressing it as a percentage of the employee’s total Columbia effort – Federal cost principles specifically acknowledge that estimates are permissible A certified effort report confirms that charges are reasonable in relation to the work performed

5. © Hogan & Hartson LLP. All rights reserved. What do sponsors consider effort devoted to a grant? Actual conduct of research in furtherance of a grant’s objectives Administrative effort directly associated with the research Special lectures, writing reports and articles, participating in seminars, consulting with colleagues and graduate students, attending meetings and conferences Preparing progress reports “On the job” training of grant personnel It doesn’t matter when or where the effort is expended (e.g., weekends, vacations)

6. © Hogan & Hartson LLP. All rights reserved. What do sponsors not consider effort devoted to a grant? Effort expended on research not in furtherance of the objectives of the grant to which it is charged, i.e., effort related to another grant or to an area of general scientific interest New proposal writing General instruction General administrative activity Unrelated departmental research Unrelated clinical activity

7. © Hogan & Hartson LLP. All rights reserved. How much flexibility do PI’s have to define the scope of their grants? Research objectives can and do evolve over a grant’s period of performance – Major sponsors such as NIH and NSF recognize this and afford PIs some flexibility in terms of revising or adapting a project’s methodology and approach – But that flexibility is not without limit – And sponsors do not view their support for a PI as “one pot of money” - each grant is distinct – If research objectives evolve to the point where there is a “change in scope”, sponsor approval is required – Work outside a grant’s approved scope is not chargeable to that grant

8. © Hogan & Hartson LLP. All rights reserved. NIH Guidance “In general, the PI may make changes in the methodology, approach, or other aspects of the project objectives. However, the grantee must obtain prior approval from the NIH awarding office for a change in the direction, type of research or training, or other areas that constitute a significant change from the aims, objectives, or purposes of the approved project (hereafter “change in scope”).” NIH GPS Examples of a change scope include: – Change in the specific aims approved at the time of award – Substitution of one animal model for another – Any change from the approved use of animals or human subjects – Shift of the research emphasis from one disease area to another – Application of a new technology, e.g., changing assays from those approved to a different type of assay

9. © Hogan & Hartson LLP. All rights reserved. NSF Guidance “NSF believes that the PI/PD and co-PI/co-PD, operating within the established policies of the grantee organization, should feel free to pursue interesting and important leads that may arise during the conduct of a research (or other grant-supported) project or to adopt an alternative approach which appears to be a more promising means of achieving the objectives of the project. Significant changes in methods or procedures should be reported to appropriate grantee official(s) and the cognizant NSF Program Officer.” NSF AAG

10. © Hogan & Hartson LLP. All rights reserved. Principles for determining whether effort is chargeable to a grant There is some room for interpretation Sponsors fund projects based on proposed goals, objectives and methodologies Auditors and IGs do not view their agency’s support as discretionary funds for PIs Discretion to modify the approach that got you an award in the first place exists but is not unfettered As the PI, you are responsible for the charges to your grants – If you were interviewed by an auditor, consider how would you defend your decision to charge a particular researcher to a specific grant

11. © Hogan & Hartson LLP. All rights reserved. Principles for determining whether effort is chargeable to a grant (cont’d) Progress Report – Provides some basis to defend salary charges related to described activities – More persuasive for future work than past work – But the govt can and does question its own “tacit” approvals during audits and investigations The cost principles recognize that research and teaching are often “inextricably intermingled” – Arguably more flexibility for grad student charges than there is for faculty charges E.g., on the job training – Unrelated research, however, still not chargeable

12. © Hogan & Hartson LLP. All rights reserved. Questions?